This Is Why India's Growing Demand For Oil And Gas Impacting Imports

India is the third-largest crude oil importer across the globe. There has been a notable transformation in the oil and gas sector in India. Increasing demand for natural gas and crude oil in India has put a significant strain on its energy supply chain, leading to a surge in imports and dependence on foreign suppliers. In 2021, 91.9% of crude oil imports in India came from 15 countries, with the United States leading as the largest buyer of refined oil products from India.

In this article, we will explore oil and gas demand in India, its imports and much more.

Oil And Gas Sector In India: Overview

·      Oil Demand In India- The demand for oil in India is projected to double by 2030, reaching 7.4 million barrels per day, up from 3.7 million barrels per day in 2013. To cater to this rising demand, Prime Minister Narendra Modi has announced plans to increase India’s refining capacity to 450 million metric tons by 2030, up from the current 250 million metric tons. This expansion aims to raise India’s oil demand share in the global market from 5% to 11%.

·  Oil Imports Dependence On Russia- Due to an import dependence of 82.8% for crude oil and 45.3% for natural gas, the country has been making efforts to fulfil its increasing energy needs. India’s dependence on crude oil imports has led to a surge in trade with Russia, particularly after the imposition of Western-led sanctions following Russia’s invasion of Ukraine. In March 2023, crude oil imports in India reached an 11-month high of 21.23 million tons, 34% of the total imports were by Russia. This trend has raised concerns about the impact on other suppliers and whether they are experiencing reduced demand.

Need To Balance India’s Energy Needs

Despite the health risks associated with crude oil exposure, such as chemical pneumonia, irritation of the respiratory system, and neurological effects, oil remains a crucial component of India’s energy supply. Oil is the largest source of the country’s total supply of energy, which is only next to coal, and plays a vital role in India’s total final consumption. However, India needs to strike a balance between meeting its energy needs and addressing the environmental and health implications of crude oil consumption.

OFB’s Insight

As Asia’s crude oil imports continue to remain robust, driven primarily by China and India, the future of crude oil import and refining in India is expected to evolve significantly. The country’s focus on increasing its refining capacity and catering to the growing domestic and international demand for oil will play a crucial role in shaping India’s energy landscape. As the country moves forward, it must also explore alternative sources for the oil and gas sector in India and invest in renewable technologies to ensure a sustainable and secure energy future.